Senate President Novelle Francis Jr. announced Friday his withdrawal of a proposed online tax bill following a public outcry over the threat of higher prices on online purchases.
In a statement, Francis said he respected the concerns of the community in regard to Bill 33-0330 but that the merits of the bill were “drowned out by the inaccurate information on social media.”
Francis’ spokesperson Shawna Richards said the bill wasn’t even introduced on the Senate floor but had already made its rounds in the public and left Francis at a “significant disadvantage.”
“The level of discourse eroded so quickly, we really did not have any opportunity to discuss the merits of the bill because minds were already made up,” she said.
In his statement, Francis encouraged the community to remain engaged in the legislative process and to use available tools and resources to “form their own conclusions on proposed measures.”
Bill 33-0330 sought to impose a 2% gross receipts tax on companies that were not physically located in the territory — such as Amazon and Wayfair — but do business in the Virgin Islands through digital means. Francis argued that the tax would enable the territory to generate revenue for critical services and programs, including the Government Employees’ Retirement System. Collectively, the tax was purported to generate $50 million annually.
Following a press release from Gov. Albert Bryan Jr. on Tuesday, in which he voiced his support for the bill, and a subsequent statement from Francis describing the measure, the bill faced swift backlash, as many feared an additional tax on remote sellers could lead them to drive up costs.
The St. Croix Chamber of Commerce, in particular, penned a scathing statement on Thursday, arguing that the bill would hike the cost of all shipped goods, including food, clothing and auto parts, as well as the costs associated with everyday online service providers like Netflix and Amazon.
“Given our size and population, the territory simply does not have all the goods and supplies that consumers and businesses need in order to avoid utilizing online retailers,” said St Croix Chamber Chairman of the Board Ryan Nelthropp in the statement.
Richards said it is unclear whether Francis will reintroduce the bill at a later date. The measure was touted by the Bryan administration as one of three possible avenues to salvage the territory’s ailing pension system.
The other two are the Cannabis Use Act and a second Internal Revenue Matching Fund debt refinancing deal that Bryan intends to finish before the end of December.
“While the wishes of the people take precedence in this matter, what has not changed is my commitment to identify revenue generating measures that can bring much needed stability to the Government Employees Retirement System,” Francis said.
“There is a significant amount of revenue that is going to benefit other communities while we are on the eve of GERS insolvency on our home front.”